INDIANAPOLIS (AP) -
House lawmakers took up a Senate proposal to cut business taxes on Monday,
as fiscal leaders continued working behind the scenes to craft a compromise
package of cuts this legislative session.

Members of the
House Ways and Means Committee trudged through three hours of testimony from
business leaders seeking further tax cuts, and school and local government
officials looking to be spared further budget cuts.

The Senate plan
would eliminate the state tax on business equipment for small business
owners while also trimming back the corporate income tax from 6.5 percent to
4.9 percent -- the second major cut across the board in recent years. House
Republicans, including some who heard testimony Monday, drew up a different
plan that would give county leaders the option of eliminating the state’s
business equipment tax.

House Ways and
Means Committee Chairman Tim Brown, R-Crawfordsville, hinted that he would
like to see more of the House’s approach -- with the decision placed on
local leaders -- inside the Senate measure. Eliminating the tax would hit
different counties in very different ways, he said.

“We have different
transfers (of tax burdens) to other property taxpayers within those
counties,” Brown said. He said that was why the House Republican plan, House
Bill 1001, “is a unique conversation to every county, so it therefore lends
itself to better representation at the county level rather than us doing a
blanket thing across the state.”

Senate President
Pro Tem David Long, R-Fort Wayne, noted that the state’s budget leaders are
in routine talks behind the scenes at the Statehouse.

“We’re in
discussions -- the governor’s office, the Senate leadership, the other
fiscal people, the House leadership and their fiscal leaders. We’re all
meeting weekly and talking and seeing if we can find common ground,” he
said.

The proposals are
responses to Republican Gov. Mike Pence’s call for the complete phase-out of
the tax, but the governor has taken on a limited role in the debate, much as
he has with other issues this legislative session. Pence repeatedly declined
to say what he would like done with the proposals during a tense meeting
with Statehouse reporters last week.

Pence and the
Senate’s author, Sen. Brandt Hershman, R-Buck Creek, say the economic
benefits could outweigh the losses if businesses start flocking to
lower-taxed areas. They argue that the ending tax will keep Indiana
competitive now that it’s surrounded by states with lower or no equipment
taxes.

But a report
released last week from the Indiana Fiscal Policy Institute, which studies
state-level budget decisions, shows that the tax has little effect on a
business’ decision to move from one state to the next. And any benefits
could take years to kick in.

Local leaders - who
rely on the tax for $1 billion in support each year - have emerged as the
sharpest critics of the proposal. Cities and schools, they say, would be
left to cut services or raise other taxes to make up for the loss in the
meantime.

Mayors and school
lobbyists asked lawmakers to study the issue over the summer or find a way
to replace any money that is cut from their budgets as a result. They say
that property tax caps set in 2008 have effectively crippled their ability
to provide basic services.

“Indiana’s public
schools can’t take any more hits,” Denny Costerison, Indiana Association of
School Business Officials executive director, said during testimony. “We
can’t take any more losses.”

Brown said how the
committee will handle the two approaches is yet to be seen, but there’s a
chance a proposal to chop the research and development tax cut in half will
be taken out of the bill.